World Cup boost hid a struggling economy: Moody's

Moody’s Analytics warns that New Zealand’s growth is likely to fade after the boost from the Rugby World Cup, as global financial pressure and industry weakness hit the country’s exports.
Photo / Richard Robinson.

Economic research group Moody's Analytics warns that New Zealand's growth is likely to fade after the boost from the Rugby World Cup, as global financial pressure and industry weakness hit the country's exports.

The group expects a 'solid' 0.6 per cent growth when Statistics New Zealand releases Gross Domestic Product for the three months to September 30 tomorrow, but says that both the World Cup and the Christchurch rebuild have off-set the underlying trends of a "struggling economy."

New Zealand is still seeing consumer caution and a continuing trend of households choosing to save and repay debt rather than spend.

They point also to the manufacturing sector, which has taken a hit from weaker dairy and meat processing as well as wholesale trade.

Combined with the European debt crisis and slowing Asian demand, this weakness will curtail the temporary growth seen in retail, tourism and service sectors following the World Cup, Moody's Analytics says.

Residential construction has also remained weak, but is recovering after the Canterbury earthquakes, thanks to rebuilding efforts, and served to compensate for a similar weakness in non-residential building.